Roses are red
Violets are blue
We read some great research,
And summed it up for you.
We focused on spending-
A topic that shines
We want nothing less
For our Health Policy Valentines!

Baum, A., et al. Health Care Spending Slowed After Rhode Island Applied Affordability Standards to Commercial Insurers. Health Affairs; February 1, 2019. In 2010, Rhode Island implemented affordability standards, including annual price inflation caps for inpatient and outpatient services, value-based hospital payments, and increasing the share of spending on primary care and care coordination services without raising premiums. Researchers evaluated the success of these affordability standards between 2007-2016 by comparing their study population to similarly situated groups of people in other states.

What It Finds

• Between 2007 and the 2010 implementation of affordability standards, Rhode Island experienced an average fee-for-service (FFS) quarterly spending increase of $22 per enrollee, similar to the $20 quarterly FFS spending increase observed in the control group.
• After implementation, relative to the control group, FFS spending trends in Rhode Island decreased by an average of $76 per enrollee from 2010-2016, an 8.1 percent decrease from the average 2009 FFS spending. Spending for non-FFS services increased by $21 per enrollee, largely due to increased spending for primary care services. However, on net, due to the increased care coordination efforts, the state experienced a net reduction of $55 per enrollee in total spending.
• Utilization and quality measures were largely unaffected by the implementation of affordability standards, suggesting that the spending reductions were derived primarily from reductions in the prices for health care goods and services.

Why It Matters

State and federal policymakers are looking for ways to curb high health care costs. Rhode Island’s affordability standards provided an opportunity to test the success of a particular model. Researchers found that Rhode Island’s standards reduced spending by lowering prices rather than lowering utilization of services. States looking to reduce health care costs may want to use their regulatory power, like Rhode Island did, to drive needed changes in health care pricing and delivery.

Adler, L., et al. State Approaches to Mitigating Surprise Out-of-Network-Billing. Brookings Institute; February 19, 2019. Surprise medical bills, or bills that occur when patients are unavoidably treated by an out-of-network (OON) provider, are top of mind for state and federal policymakers after intense media coverage. This issue brief by the Brookings Institute explains why surprise bills occur, and analyzes different policy solutions.

What it Finds

• About one in five emergency department visits included care from an OON provider that may prompt a surprise OON bill if state law does not prohibit the practice.
• OON bills often stem from emergency care and services delivered by OON providers in an in-network setting, which often includes providers that are not chosen by the patients, such as ancillary physicians (e.g., anesthesiologists, pathologists, radiologists, and assistant surgeons), hospitalists, and neonatologists.
• Researchers outline five principles that are imperative to designing state-based surprise billing solutions:
  • Prevent patient from receiving a surprise OON bill, or at least take the patient out of the dispute;
  • Apply protections across care settings where patients may lack a “meaningful choice of provider,” including all OON emergency care, post-stabilization services at an OON facility, OON emergency ambulance transport (including air ambulance), OON ancillary services, and OON neonatal services;
  • Reduce reliance on notice and consent exceptions as they do not always ensure that the patient understands what they are consenting to, and do not always come with realistic alternatives;
  • Establish ways to enforce laws and regulations;
  • Pay attention to ERISA preemption, which prevents states from regulating self-insured employer plans. States should focus on regulating providers to protect enrollees in self-insured plans.
• Researchers concluded with two recommended policy options:
  • A pure billing regulation approach, applied to all emergency and ancillary services, that limits OON charges and holds fully insured consumers harmless to any cost-sharing beyond what they would pay for in-network services.
  • A hybrid of billing and contracting regulation that would regulate the billing practices of all OON ambulances and emergency facilities, but while prohibiting independent billing by ancillary physicians in in-network facilities.

Why it Matters

Despite widespread concerns about surprise billing, most states still lack comprehensive protections for consumers. State and federal policymakers seeking to enact such protections need to understand the implications of different policy proposals for consumers as well as on health care spending more broadly.

Pollitz, K., et al. Claims Denials and Appeals in ACA Marketplace Plans. Kaiser Family Foundation; February 25, 2019. Researchers at the Kaiser Family Foundation analyzed 2017 data released by CMS to evaluate the number of claims denials and appeals among major medical commercial insurers offering coverage on the individual market.

What it Finds

• Nineteen percent of in-network claims, or 42.9 million claims, were denied by insurers in 2017, with denial rates ranging from 1-45 percent depending on the insurer.
• Consumers appealed less than 0.5 percent of denied claims, and insurers overturned 14 percent of appealed denials.
• Fewer than 1 in 11,000 denied claims made it to external review, an option guaranteed to consumers who opt for it in the event of a denied claim.
• More data are needed to provide context on why claims were denied.

Why it Matters

Health insurance can only provide protection from high-cost health care insofar as it covers claims. With an average of almost one in five in-network claims denied by major medical insurers on the individual market and a shockingly low appeal rate, many insured consumers are stuck paying high medical bills. This analysis leverages vital data – data that is only public thanks to the ACA – to help us better understand insurers’ medical management tactics and the hurdles that consumers face. However, more data are needed on the federal and state level to assess why certain claims are denied and why so few consumers exercise their appeal rights.

Cooper, Z., et al. Hospital Prices Grew Substantially Faster Than Physician Prices for Hospital-Based Care in 2007-14. Health Affairs; February 1, 2019. Evidence suggests that increases in private health spending are driven by provider prices, but there is a dearth of research comparing the growth rate of hospital and physician prices. Researchers took a look at price growth in each category from 2007-2014 to pinpoint the major source(s) of rising health care costs.

What it Finds

• Hospital prices grew 42 percent over the study period for inpatient care, versus an increase of 18 percent for physician services.
• For outpatient care, hospital prices grew 25 percent, compared to a 6 percent increase for physician prices.
• Hospital prices accounted for a greater share of the total cost of care (the sum of physician and hospital prices), ranging from 61 percent to 84 percent of the cost of care.
• Authors of the study suggest various methods to moderate the growth in hospital prices, such as antitrust enforcement and reference pricing.

Why it Matters

As policymakers, employers, and insurers look to cost containment strategies in response to increased provider consolidation, understanding the source of rising prices is vital to implementing effective solutions. This study suggests that stakeholders should focus on addressing hospital prices to reduce spending in the privately insured market.

Cooper, Z., et al. Variation in Health Spending Growth for the Privately Insurance from 2007 to 2014. Health Affairs; February 1, 2019. Researchers analyzed spending data from the Health Care Cost Institute, including information from insurers Aetna, Humana, and UnitedHealthcare, to compare the growth in Medicare spending to insurer spending on people with employer-sponsored insurance (ESI) over a seven-year period. The study analyzed spending across hospital referral regions (HRRs), or geographic regions that include at least one hospital and other necessary provider services.

What It Finds

• Private spending per ESI enrollee increased 16.9 percent from 2007-2014, while fee-for-service Medicare spending per beneficiary decreased by 1.2 percent over the same period.
• A low correlation (0.211) between growth in fee-for-service Medicare spending and HRR-level private ESI spending indicates that different factors may be responsible for spending trends in the two populations.
• During the study period, private ESI and Medicare outpatient spending increased significantly, while Medicare inpatient spending decreased, and private ESI inpatient spending increased only slightly.
• The study found substantial variation across HRRs for private ESI spending compared to Medicare spending, suggesting that some regions were more successful at containing rising health care costs.

Why It Matters

While trends in fee-for-service Medicare spending are well documented, comparatively little is known about private insurance spending growth. This study highlights the growing difference between employers’ health spending and Medicare spending, largely due to increases in the prices that hospitals and physicians charge to commercial insurers. Policymakers need to take a hard look at spending growth in private insurance, and understand the nuances driving spending in different coverage populations, in order to curb costs for public and private payers as well as for consumers.